Filing Requirements for Filing Status Change from a "C Corp" to an "S Corp"

In an effort to more accurately receive and process returns from taxpayers who are requesting to change their filing status from a C Corporation (filing Form 1120) to an S Corporation (filing Form 1120S), the Internal Revenue Service recommends that taxpayers follow the steps below and use the following form.

Alert: Please ensure that your Form 2553 includes a signature as noted in the instructions from the Form 2553 (subset below) If the form is submitted without the proper corporate officer signature, it will not be considered timely and impact the processing of your return. Form 2553 is required to be submitted in PDF format if the taxpayer is submitting this form with their timely e-filed return.

Signature

Form 2553 must be signed and dated by the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other corporate officer (such as tax officer) authorized to sign. If Form 2553 is not signed, it will not be considered timely filed.

Required form to be filed to change filing status:

*Form 2553 – Election by a Small Business Corporation

Step 1. Timely file a paper copy of the Form 2553 with the appropriate Service Center as directed in the Form 2553 instructions. You may mail or fax this form.

Step 2. The corporation will receive an acknowledgement and approval of the S corporation election. If the notification of approval is not received, the corporation should follow-up with the Service Center where the Form 2553 was filed.

Step 3. File the last C Corporation return (Form 1120) by the due date or extended due date. Note: Some taxpayers are required to file electronically. For additional information on which Form 1120 filers are required to file electronically, please see T.D. 9363, I.R.B. 2007-49.

Step 4. File the S Corporation return (Form 1120S) by the due or extended due date. Note: Some taxpayers are required to file electronically. For additional information on which Form 1120S filers are required to file electronically, please see T.D. 9363, I.R.B. 2007-49.

The filing of the initial Form 1120S return will finalize the change of the entity’s filing requirement on the Internal Revenue Service’s records.

Guidance for taxpayers who have not timely filed their election request to be treated as an S Corporation.

If the election Form 2553 has not been timely filed, the corporation must generally request relief for the late election by requesting a private letter ruling and paying a user fee in accordance with Rev. Proc. 2008-1, I.R.B. 2008-1 (or its successor). However, certain relief provisions are available as discussed below.

Form 2553 Has Not Been Timely Filed
Form 1120S Has Been Timely Filed for the First Year of the Intended S Corporation Election

If the Form 2553 has not been timely filed, a corporation’s Form 1120S cannot be accepted and processed by the Service Center. The Service Center will notify the corporation of the invalid S election and the corporation should follow these steps:

Step 1. File a paper copy of the Form 2553 with the Service Center that provided the notification of invalid S election. Annotate at the top of the form “Filed pursuant to Rev. Proc. 2003-43”. Attach to the Form 2553 a statement establishing reasonable cause for the failure to file Form 2553 timely. For additional details on eligibility to utilize this relief provision, see Rev. Proc. 2003-43, I.R.B. 2003-23. Mail the Form 2553 and the attached reasonable cause statement to the Service Center separate from any other returns or information being submitted. Note: If you are not eligible to utilize Rev. Proc. 2003-43, you must follow the guidance in Rev. Proc. 2008-1 (or its successor).

Step 2. File the last C Corporation return (Form 1120) by the due or extended due date. Note: Some taxpayers are required to file electronically. For additional information on which Form 1120 filers are required to file electronically, please see T.D. 9363, I.R.B. 2007-49.

Form 2553 Has Not Been Timely Filed
Form 1120S Has Not Been Filed for the First Year of the Intended S Corporation Election

If the Form 2553 has not been timely filed and the Form 1120S has not been filed, you should follow these steps:

Step 1. You have two options for Step 1, that is, A or B. If you fail to qualify for Step A, use Step B. Only one of the two is required. Note: If you fail to qualify for Step A or B, then the corporation must generally request relief for the late election by requesting a private letter ruling and paying a user fee in accordance with Rev. Proc. 2008-1, I.R.B. 2008-1 (or its successor).

A. File a copy of the Form 2553 with the initial Form 1120S. On the Form 2553, provide a statement establishing reasonable cause for the failure to file the Form 2553 timely.
Note: To qualify for this relief provision, the Form 1120S and attached Form 2553 must be filed within 6 months of the due date of the Form 1120S (excluding extensions). For additional details on eligibility to utilize this relief provision, see Rev. Proc. 2007-62, I.R.B. 2007-41.

OR

B. File a paper copy of the Form 2553 with the appropriate Service Center as directed in the Form 2553 instructions. You may mail or fax this form. Annotate at the top of the form “Filed pursuant to Rev. Proc. 2003-43”. Attach to the Form 2553 a statement establishing reasonable cause for the failure to file the Form 2553 timely. For additional details on eligibility to utilize this relief provision, see Rev. Proc. 2003-43, I.R.B. 2003-23. Mail this form and the attached reasonable cause statement to the Service Center separate from any other returns or information being submitted. The Form 2553 should be filed prior to the filing of the Form 1120S. The Form 1120S should not be filed until the corporation is notified of the S election acceptance.

Step 2. File the last C Corporation return (Form 1120) by the due or extended due date. Note: Some taxpayers are required to file electronically. For additional information on which Form 1120 filers are required to file electronically, please see T.D. 9363, I.R.B. 2007-49.